Tax-Free Savings Account

A Tax-Free Savings Account (TFSA) is a great way to save money for a short term goal or to complement your retirement savings plans. A TFSA is a flexible savings account registered with the Government of Canada that allows you to earn tax-free investment income.

How it works:

For 2016, the TFSA contribution limit will return to $5,500.

TFSA contribution limit up to December 31, 2015 is $10,000.

TFSA started in 2009 with a contribution limit of $5000.

Contributions to a TFSA will not be deductible for income tax purposes, but investment income, including capital gains, earned in a TFSA will not be taxed, even when withdrawn.

Unused TFSA contribution room can be carried forward indefinitely to future years.

TFSA Holder may withdraw funds at any time; withdrawals may be restricted by investment terms.

The amount withdrawn can be put back in the TFSA at a later date without reducing your contribution room, subject to certain restrictions.

Neither income earned in a TFSA nor withdrawals will affect your eligibility for federal income-tested benefits and credits.

You don't need to have earned income to contribute to a TFSA. There is no requirement to collapse your TFSA at a set age.

Fixed Rate – TFSA

Available in 1, 2, 3, 4 or 5 year terms

Minimum deposit $500

Non-redeemable

Interest is paid annually to the investment

Competitive Rates

Variable Rate – TFSA

Variable Rate of interest

Interest paid semi-annually in June and December

Fully or partially cashable at any time (partial withdrawal fees apply)

How do I know how much I can contribute to a TFSA?

Your TFSA contribution room information can be found by going to one of the following services available through the Canada Revenue Agency:

You should keep records about your TFSA transactions to ensure that you do not exceed your TFSA contribution room. The Canada Revenue Agency will also keep track of your contribution room and determine the balance of room at a particular time for each eligible individual based on information reported annually by yourself and the TFSA issuers.